Reality Strikes Back

 

Authored by Charles Hugh Smith via OfTwoMinds blog,

The status quo response would be amusing if the consequences weren't so dire.

Rather than stare at empty shelves, you have two options for distraction: you can don a virtual-reality headset and cavort with dolphins in the metaverse, or you can trade various forms of phantom wealth that always go up (happy happy!) because the Fed.

Neither distraction actually solves any real-world problems, a reality we can call the Revenge of the Real World We've entered a peculiar phase in American history in which illusions of wealth and control are the favored distractions from the unraveling of the real world economy and social order.

Printing trillions of currency units can't restore the global supply chain or social cohesion, Rather, jacking phantom wealth to the moon is only accelerating the collapse of the social order and the economy even as it accomplishes absolutely nothing in terms of solving real-world problems.

Let's start with the core economic realities of the 21st century:

1. The number of high-consumption ("middle class") people doubled from 1 billion to 2 billion. The human populace has expanded to 7.9 billion individuals, but poor people who don't have enough money to consume large quantities of energy, goods and services delivered by the global supply chain don't have much of an impact on global consumption of energy and resources. It's the number of people jetting around the world playing their part in the landfill economy (toss the old one, buy a new one) who drive "growth" (i.e. waste is growth).

Strangely enough, there are actual physical limits to resources being transformed into junk being dumped in the landfills. Humanity's rapacious appetite for stuff has extracted all the cheap-to-extract resources and now all that's left are the increasingly expensive-to-extract resources.

2. Corporate America offshored most of the production of essentials to exploit the low labor and energy costs, minimal environmental standards and currency arbitrage of overseas production. The net result has been an astounding increase in corporate profits. ... Continue reading >>>

 

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by Ian R Thorpe

Money laubdering: big business or a sign of bankers' paranoia

On Monday (1 February, 2016) just two days ago, Bloomberg called on the central banks of the world to “bring on a cashless future” in an Op-Ed that calls notes and coins "dirty, dangerous, unwieldy, and expensive."

We can imagine it would be quite easy to harm someone by firing large coins at them from a gun and terrorists could probably stuff an improvised explosive device with small coins rather than nails or nuts and bolts. And if somebody tried hard enough they could probably choke on a bank note. But cash dirty? No more so than the hundreds of things we must touch in public areas in the course of our daily lives. Unwieldy? Not compared to the lead boxes we will have to carry to ensure our contactless cards don't debit our accounts every time we go near a suitable reader. And expensive? Not to us, we buy an item for £$€1 and that's exactly what we pay for it.

So like me and my colleagues, you probably never thought of your cash in any of those ways, but increasingly, authorities and the powers that be seem determined to lay the groundwork for the abolition of what Bloomberg calls “antiquated” physical money.

We’ve documented the cash ban calls and moves on a number of occasions including, most recently, the one from DNB, Norway’s largest bank where executive Trond Bentestuen complained that although "there is approximately 50 billion kroner in circulation, the Norges Bank (Norway's Central Bank) can only account for 40 percent of its use."

That mean, Bentestuen says, that 60 percent of money usage is outside of any control." "We believe," he continues, "that is due to under-the-table money and laundering." He really does have limited imagination if he seriously thinks that is all people use cash for.

DNB backed up its executive by claiming that after identifying “many dangers and disadvantages” associated with cash, the bank has concluded 'it should be phased out'.

On Tuesday we got more evidence that the thieving banks around the world are preparing to create a cashless “utopia” in which systems will be implemented to enable them to plunder our hard earned to cover the disasters their reckless gamblings incurs. German finance magizine Handelsblatt reported (in a piece called "The Death of Cash) that the Social Democrats - the junior partner in Angela Merkel’s coalition government - have proposed a €5,000 limit on cash transactions and the elimination of the €500 note.

“Limits on cash transactions would discourage foreign criminals from coming here to launder money,” says a study published by the Social Democrats. "If sums over €5,000 have to pass through traceable bank transactions, laundering would be severely hampered," it adds.

Today (3 Feb, 2016), we learned via the news feeds that German Deputy Finance Minister Michael Meister had confirmed the government's support for the idea when he told reporters that Germany is proposing a pan - European ban on cash transactions over €5,000 to combat terrorism financing and money laundering.

“Since money laundering and terrorism financing are cross-border threats,” it makes sense to adopt a bloc-wide “solution”, but “if a European solution isn’t possible, Germany will move ahead on its own,” he added. Really Herr Meister. Why not just close your borders and stop criminals entering the country.

This sudden outbreak of money laundering comes at a rather convenient time for policy makers in Europe. Interest base rates are already sitting at -0.30% and are likely to be cut by an additional 10bps (one hundredths of one per cent) in March. But that’s not likely to halt the disinflationary impulse. European Central Bank chief Mario Draghi isn’t anywhere close to his inflation target and efforts to stimulate European economies have been totally ineffective.

What is needed is a revival of consumer spending and the gradual phasing out of cash is seen as a way of stripping the public of its economic autonomy. At present Central banks can only control interest rates down to a certain "lower bound". Once negative rates are passed on to depositors - as Swiss and Japanese banks have already done, for different reasons - people will have to pull their money out of the banks and spend it rather than pay the banks for gambling with it. The more negative rates go, the faster those withdrawals will be.

Ban cash and this problem is eliminated. In a cashless society with a government-managed digital currency there is no effective lower limit. If the economy isn’t doing what bureaucrats want it to do, they can simply make interest rates deeply negative, forcing would-be savers to become consumers by making them choose between spending or watching as the bank simply confiscates their money in negative interest.

As for that money laundering bollocks, if you want to know who is really behind it: US Department Of Justice helped cover up Big Banks money laundering for drug cartels


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